As the big ball dropped in Times Square, the Port Authority dropped the ball on its bid to excavate a key section of the World Trade Center site by Dec. 31, delaying the transfer of the property to a private developer.

As a result, the PA will have to cough up $300,000 a day in fines for each day it is late, which can total up to $13 million based on some estimates.

The deadline and fines were part of an agreement hammered out in 2006 between the PA and developer Larry Silverstein, who is building on the 16-acre site.

The agency’s executive director, Anthony Shorris, said contractors worked 20-hour days for months to clear land for two of five planned office towers at the site.

Shorris said crews have removed 300,000 tons of material so far, but could not finish by the deadline.

“They were ambitious goals,” Shorris said. “We did our best to meet them. This is an enormous project. I wished we’d be right on schedule.”

Instead, Shorris said, the agency would finish the foundation for Tower 4 in two weeks, and the foundation for Tower 3 two to four weeks later. The delays mean Silverstein will pocket between $9 million and $13.5 million in fines.

Also losing money is the job’s contractor, which, Shorris said, forfeits a $10 million bonus for missing the deadline, money that will largely offset the PA’s penalty.

Despite the setback, Silverstein struck an optimistic tone.

“We appreciate how much the Port Authority has accomplished this year, and a few extra weeks to complete everything is a minor bump in the road in the context of this entire project,” said Janno Lieber, Silverstein’s director of World Trade Center development.

The PA’s work includes the construction of a “bathtub” retaining wall at the southeast corner of the site.

The agency said the project is more than 90 percent complete.

The missed deadline comes on the heels of an announcement that the long-awaited 9/11 Memorial will be delayed another two years.

Officials had said for years that the “Reflecting Absence” memorial featuring two waterfall-filled pools marking the Twin Towers’ footprints would open on Sept. 11, 2009, and that a museum set below street level was expected to open a year later.

Now, the first visitor isn’t expected until 2011 – 10 years after the towers were destroyed.

Problems tearing down the toxic former Deutsche Bank building, where two firefighters died in an out-of-control blaze last year, have also plagued rebuilding efforts.

Major construction on 1 World Trade Center, the much-ballyhooed Freedom Tower, began in mid-2006 after a series of delays and design changes. The tower’s footings and foundations are nearly complete, and steel will begin to rise above street level during the first part of 2008.